American Investment Services, Inc.

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Nov. 2015 – Social Security: Changing the Rules

The recent budget deal that emerged from Congress includes provisions that will spell the end of two popular claiming strategies for Social Security.

Once a worker reaches full retirement age, he or she can file for benefits but suspend actual payment of those benefits in order to earn credits that increase the eventual benefit by as much as 8% per year (plus cost of living adjustments). A key feature of this “file and suspend” strategy was that it still permitted other family members (spouse or dependent children) to receive an immediate benefit based on the filer’s past earnings, even while the filer’s deferred benefit continued to grow.

This feature will no longer be available to younger workers. Your family members will no longer be able to receive a benefit based on your past earnings unless you are actually receiving benefits. Older individuals may get a reprieve, however: If you are at or older than your full retirement age and if you execute this “file and suspend” strategy by May 1, you can still ensure that a family member receives a benefit based on your past earnings. If you have not reached your full retirement age by May 1, however, this strategy will no longer be available.

Another widely adopted strategy allowed a spouse at full retirement age to claim benefits on the past earnings of a spouse currently receiving benefits, while not taking his or her own benefit (in order to allow credits to accrue). Those who have reached the threshold age of 62 (the minimum age to qualify for this restricted claim strategy) by December 31, 2015 can still take advantage of this opportunity; those who are younger however will no longer have this option as they will have to claim all of their benefits when they file.

Also In This Issue

Year-End Tax Considerations
Making Sense of the New Medicare Premiums
Timely Tax Tips
The High-Yield Dow Investment Strategy
Recent Market Statistics
The Dow-Jones Industrials Ranked by Yield
Recommended Investment Vehicles